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The red school bus that runs over governments

The teachers have a point: education is underfunded and good teachers are underpaid. But they are not supposed to be making this point before the government gets re-elected.

The government is frozen in the headlights while it shuffles towards election day. After the headlights, however, comes the big red bus.

This bus is an ever-onward demand for social services and income support. It bumps constantly into and over limits to how much governments can tax without taxpayer or investor revolt.

It has been running over governments of all stripes in our sorts of countries through the past quarter-century. Left governments have ceded to right governments and back to left governments — and now, in some countries, back to right again. Prophets of the “new” right and the “new” left have proclaimed victory for their ideologies each time their side has been rising and the other side falling.

In the 1990s the spending/tax conundrum got more complex. Education came to be not just a social service but a mechanism for lifting economic growth rates, on which living standards and the means to pay for the social programmes depend.

A brutal conclusion follows: if education is starved, or even a bit underfed, there will not be the wherewithal to pay for government services, including education.

That’s not a problem for the better off, who can buy the education they think their children or they themselves need.

But it is a problem for governments. The welfare state decrees that everyone must at least have an equal chance.

This is no longer the simple difference of 50 years ago between wage-workers and salaried managers, nor even the more complex difference between racial minorities and majorities.

Whole new groups now expect equality. Last week’s addition was childless couples, claiming an absolute right to high-tech help on your taxes to conceive babies naturally — in a world awash with orphans. The state is now apparently responsible for fixing heartbreak.

And what first-world society would not want every childless couple to have its own children if the boffins can engineer it? The problem is, this country can’t afford it.

This supply problem is prompting questioning — even from the left and even, just beginning, in this country — about the ever-rising numbers of people dependent on the state for their income. This, they worry, is an economic brake and a social failure. The welfare state was supposed to make people independent.

There are two ways to escape the conundrum.

One way is to chop some aspects of spending and instead spend more on education and on other state-sponsored mechanisms that might lift the country’s wealth and enable jobs to be created and social services paid for.

But the two big parties deem spending cuts electorally impossible.

The other way is to push up taxes.

Michael Cullen hinted at this in the Budget. He noted that health care spending has been taking more of national output year by year, decade by decade — even while nurses remain underpaid.

Cullen said, correctly, that this can’t go on forever.

But it will go on a while yet, especially since this government has reinstalled as a central tenet the notion that everyone should have free, or nearly free, access to all health care they need. And what first-world society could disagree?

So if Cullen is to get home his message to the electorate, he needs, as his Budget allusion flagged, to bring home to every person the cost.

One way to do that might be to dedicate part of income tax to health, perhaps as a flat percentage or perhaps partly graduated. If voters want new spending on health, up would go the tax and each earner would pay more.

We already do that for ACC. And, while there are no concrete plans for it in the cabinet — in any case, none that will be waved around before the election — it does resonate with a senior minister or two.

But none of this spells higher wages for nurses — or teachers. Under a left government which thinks public service a higher calling, they are supposed to get part of their reward in satisfaction from serving.

No doubt they do. But they also think they merit more readies. How will Labour buy them off in a second term? That is an underground question in this election.